The SNP500 continues to remain under pressure with the price of Oil increasing and Consumer Confidence reaching a 17-month low. Yesterday, the price of the SNP500 declined by 2.05%, the Dow Jones by 1.56% and NASDAQ by 3.09%. This price action is looking very different to the previous week where we saw the stock market correct upwards and, according to economists, this is mainly due to a strong “risk off” market.
When looking at the price movement of the SNP500 we can see that the price still remains higher than the previous lows. SNP500 futures are currently at the breakeven point as traders await to see whether the investors will keep selling once the market opens this afternoon. At the moment, the price is lined up to potentially form a lower high but it is not yet certain if the downtrend will continue. So far, the price has corrected downward by 37% compared to the previous week’s increase.
The price is being influenced by multiple factors within the market. One of the factors worrying traders is that the price of oil is rising again and has increased by almost 9% over the last 4 days alone. Rising oil prices can pressure inflation, fuel higher interest rates and increases company expenses.
Another influencing factor is the fact that the US Consumer Confidence Index has declined significantly, with the survey indicating that households are preparing for a recession. Many banks, including HSBC and JP Morgan, came out after the announcement advising that the market has “not yet fully priced in the recession”. This is yet another factor that’s got traders feeling anxious.
The “risk off” appetite can also be seen when looking at other investment categories such as cryptocurrencies. The crypto market is specifically examined to determine the risk appetite of traders. Today, the price of bitcoin declined 0.90% and by 5.37% over the past 5 days.
Tesla has also commented on the condition of the global economy. According to the company, they have dismissed 200 employees involved in the development of autopilot systems for Tesla cars. According to the CEO of the company, the difficult global economic condition and uncertainty has forced them to make a 10% reduction in the number of employees.
The above news has also triggered speculation that the company is likely to see a poorer performance in the latest quarter. Other big companies, such as Apple and Amazon, have reported similar news. The fact that the Chinese economy, which is one of the largest in the world, was under lockdown is also predicted to strongly affect the performance of companies in general, but specifically Apple and Tesla. Especially since Tesla was already forced to temporarily shut down its Shanghai factory leading to a reduction in car production.
It should also be noted that the market is likely to be influenced by the upcoming earning season which is due to officially start next week. The performance of companies over the past quarter is likely to strongly affect investor’s level of demand. In addition to this, the earnings reports may provide further insight as to the likelihood of a recession.
Copyright © 2022 – All rights reserved.
NAGA is a trademark of The NAGA Group AG, a German based FinTech company publicly listed on the Frankfurt Stock Exchange | WKN: A161NR | ISIN: DE000A161NR7.
Any trademarks appearing on this website are the property of their respective owners.
The NAGA Group AG is the holding company of various companies, such as NAGA GLOBAL LLC, NAGA MARKETS EUROPE LTD, NAGA Technology GmbH, NAGA Pay GmbH and has a close link with NAGAX Europe OÜ.
RISK WARNING: Derivatives are complex instruments and come with a high risk of losing money rapidly due to leverage. A high percentage of retail investor accounts lose money when trading derivatives with this provider. You should consider whether you understand how derivatives work and whether you can afford to take the high risk of losing your money.
Trading with NAGA Trader by following and/or copying or replicating the trades of other traders involves high levels of risks, even when following and/or copying or replicating the top-performing traders. Such risks include the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Before making an investment decision, you should rely on your own assessment of the person making the trading decisions and the terms of all the legal documentation.
Restricted countries: NAGA Group AG does not provide services for the residents of certain countries, such as Afghanistan, Albania, American Samoa, Australia, Barbados, Belgium, British Virgin Islands, Burkina Faso, Cambodia, Canada (including Quebec), Cayman Islands, Central African Republic, Congo, Democratic People's Republic of Korea, Democratic Republic of the Congo, Gibraltar, Guam, Haiti, Iran, Iraq, Isle of Man, Israel, Jamaica, Jordan, Libyan Arab Jamahiriya, Mali, Monaco, Morocco, Myanmar, Nicaragua, Philippines, Russian Federation, San Marino, Senegal, Serbia, Somalia, South Sudan, Sri Lanka, Syrian Arab Republic, Trinidad and Tobago, Tunisia, Turkey, Uganda, Ukraine, United Kingdom, US Minor Islands, US Virgin Islands, USA, Vanuatu, Yemen, Zimbabwe.